KARACHI, October 30, 2019: The State Bank of Pakistan (SBP) has incurred net loss of Rs 1.043 billion (consolidated) in the FY 19 as compared to a profit of Rs 175.673 billion in the FY18.
According to Annual Performance Review of SBP for the year FY19, the decline is primarily attributed to exchange loss of Rs 506,131 million during the current year as compared to exchange loss of Rs 72,280 million in previous year. The decrease was, however, partly offset by increase of Rs 254,351 million in the net interest income.
The lending to the federal government remained the major source of SBP’s profit followed by earnings on the OMO injections.
These major income streams are offset by the increase in interest expense on liquidity mop-up from domestic financial market and increase in interest expense on international deposits.
The expenses also witnessed a growth of 5 percent during the year. The note printing charges and General administrative and other expenses are the major expense heads that witnessed growth while agency commission paid to agent commercial banks for undertaking government banking business on behalf of the Bank witnessed slight decrease during the year.
The exchange gains/ (losses) arise on FCY assets and liabilities of the Bank. Major part of the foreign currency assets of the Bank are USD denominated whereas the foreign currency liability exposure is mainly SDR and USD denominated.
Accordingly, the movement in the PKR/ SDR and PKR/USD exchange rates directly affects the exchange account. The bank incurred a net exchange loss of Rs 506,131 million during FY19 as against exchange loss of Rs 72,280 million during FY18. The PKR depreciated against USD by Rs 38.56 and SDR by Rs 80.82; accordingly, the net exchange loss increased significantly during the year.
The interest / markup income increased by Rs 331,471 million to Rs 646,009 million, registering an increase of over 105 percent. The borrowings by the Government from SBP during FY19 remained the major sources of income of the Bank during the year.
The discount/interest income earned on lending to the Federal Government increased by 171 percent due to increase in volume of borrowing as well as increase in interest rate. The interest earned on lending to commercial banks through OMO injections decreased by 41 percent due to smaller volumes of liquidity injections during the year.
The total expenditure during the year was Rs 50,467 million as against Rs 48,050 million in FY18, registering an increase of 5 percent over the previous year’s expenditure. The increase was due to 22 percent increase in banknote printing charges whereas agency commission expenses decreased by 3 percent.